Ex-Chairman of Big Board Seeks Copy of Pay Report

By LANDON THOMAS Jr.

Published: January 4, 2005

Correction Appended

Lawyers for Richard A. Grasso, the former chairman of the New York Stock Exchange, have filed a motion in a New York state court asking to see a report that chronicled how Mr. Grasso came to receive a $139.5 million pay package.

Commissioned in late 2003 by John S. Reed, Mr. Grasso's successor, the document, known widely as the Webb report, was prepared by the exchange's lawyer, Dan K. Webb of the firm of Winston & Strawn. It consists of interviews with more than 60 people, including past and present directors of the stock exchange.

The request increases the possibility that the report, which has been seen only by the stock exchange board and regulators, could be made public. The nature of its contents is the subject of intense speculation.

While the stock exchange has asserted that the document is privileged, Mr. Grasso has argued that Mr. Reed and the exchange lost any basis for keeping it private when it was delivered last year to the Securities and Exchange Commission and Eliot Spitzer, the New York attorney general.

In May, Mr. Spitzer sued Mr. Grasso, accusing him of campaigning to influence the amount of his pay, and of keeping the stock exchange board in the dark about the details of his pay package. In announcing his lawsuit, Mr. Spitzer acknowledged the contribution of the report in building his case.

People who have seen the report say it is consistent in many ways with Mr. Spitzer's complaint, offering a detailed picture that appears to show how Mr. Grasso manipulated the board, influenced his compensation and took steps to withdraw the money early.

The motion asserts that Mr. Grasso has a right to see the document because Mr. Reed has said publicly that its contents provided the grounds for a legal action and because it may be embarrassing for Mr. Grasso.

Mr. Grasso has also sued Mr. Reed, accusing him of defamation. In Mr. Grasso's lawsuit, his lawyers assert that ''Mr. Reed's and the stock exchange's campaign of disparagement lacked justification and that the Webb report did not provide a compelling basis for proceeding against Mr. Grasso.''

While asking for the report represents an unsurprising legal strategy, it carries some risk because its contents could become public if Judge Charles E. Ramos of New York State Supreme Court agrees with Mr. Grasso's request. Mr. Grasso's lawyers say the details of the report do not justify any legal action. Others who have seen it say it paints an unflattering picture of Mr. Grasso's term at the exchange.

Lawyers for the exchange are expected to assert that the report remains a privileged document.

Correction: January 5, 2005, Wednesday
An article in Business Day yesterday about an effort by Richard A. Grasso, former chairman of the New York Stock Exchange, to see a report commissioned by his successor, John S. Reed, referred incorrectly to comments Mr. Reed made about the contents of the report. Mr. Reed said that the findings of the report were an embarrassment to the exchange -- not that Mr. Grasso was.
Correction: January 6, 2005, Thursday
An article in Business Day on Tuesday about an effort by Richard A. Grasso, the former chairman of the New York Stock Exchange, to see a report commissioned by his successor, John S. Reed, referred incorrectly to comments Mr. Reed made about the contents, and a correction in this space yesterday was also erroneous. Mr. Reed said the findings of the report were an embarrassment to the exchange -- not to Mr. Grasso.